Home prices have dropped, but is housing really more affordable?

In recent years, we’ve all seen property values drop, but that does not mean everyone can now afford a decent place to live. Currently, 76% of families in the Twin Cities earning less than $35,000 per year are still paying more than they can afford for housing. The map below is an interesting visual that demonstrates the high cost of housing. It shows that in Minnesota, a person working minimum wage would need to work 86 hours per week to be able to afford a fair market two-bedroom apartment. And while it is typically thought the majority of workers earning minimum wage are teenagers, over half of the people earning minimum wage are actually over the age of 25. 

One issue is that rent has increased dramatically. According to Minnesota Housing Partnership’s 2x4 report for Quarter 1, 2012, rental demand remains high while supply is low, resulting in the tightest rental market in a decade for the Twin Cities metropolitan area.

Due to the foreclosure crisis, more homeowners have moved into the rental market. With 135,000 foreclosures since 2005, increasing demand for rental housing, along with limited rental construction in recent years that has limited supply, the average rent has been pushed up to $927. With a continued low rental vacancy rate, rates are likely to rise higher. A vacancy rate of 5% is considered to be the “balanced” point, but vacancy rates in the Twin Cities are currently at 2.8%. 

If you liked these links, visit our Housing Matters! interactive online learning center, and see our Housing News section for more articles. 

Solutions will only happen if we bring enough attention to this issue. Please share this post and help create dialog about housing solutions. 

Shari Hemmingsen, Housing Matters! Intern, and Jill Kilibarda, Education and Civic Engagement Program Manager, Twin Cities Habitat for Humanity

Image from Facebook.com